Ontario established a system two decades ago that at least one of the commodity groups there considers a good solution for licensing and bonding small and medium-sized grain companies.
The program, overseen by Agricorp, a crown corporation set up under the provincial agriculture department, includes a checkoff on soybeans, canola and grain corn.
“I think everybody’s reasonably happy with it,” said Bill McKellar, chief inspector under the Ontario Grains Act.
The program was started two decades ago. It got off to a shaky start in its early years, due to some grain dealers going bankrupt, but has since arrived on solid footing.
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All grain companies are required to be licensed in Ontario, according to Fred Brandenburg, industry and government relations manager for Ontario Soybean Growers.
Among other things, a grain dealer’s finances are reviewed as part of the licensing process to establish how much security should be posted.
“That’s what we feel has been the real strength of the program, is having a proper assessment before someone does get a licence or making sure that the proper security is in place,” Brandenburg said.
McKellar said only 15 companies defaulted on payments in the past 20 years. Most of those defaults happened in the early years of the program.
A portion of the check-off dollars that producers in Ontario pay on soybeans, canola and grain corn go into the fund that insures producers against non-payment for crop delivered.
Although the amount of check-off money needed to fund the Grain Financial Protection Program was high at the outset, the amount has since fallen considerably, Brandenburg said. It is now down to two cents per tonne on soybeans, an amount he described as “pretty small.”
“The program’s worked pretty good over the years.
“We’ve got what we hope is enough money in the system so that if there is a serious bankruptcy, it will help through that.”
The program in Ontario is one of several that have been considered over the years as producers and commodity groups on the Prairies look for ways to increase protection against non-payment.
However, one of the obstacles to adopting Ontario’s model is the idea of adding another checkoff, which would not sit well with all producers and would require some way to collect the money and administer the protection plan.
